CANBERRA, WE HAVE A PROBLEM The cost forecasting in the budget is getting a lot worse. How bad is it? The budget update issued just ahead of Christmas added another $47.8bn to government spending. That is the equivalent of doubling last year’s NDIS costs. We’re talking really big bucks here. That $47.8bn wasn’t because the economic or revenue forecasts had been revised. The cost estimates are separately updated for new forecasts for jobs and joblessness, prices and wages, interest and exchange rates, and also for new GST estimates (because any changes there are passed onto the states). And nor was it because of new policies – they’re also separately accounted for. Rather, the extra $47.8bn that we’re spending is simply because existing policies are now expected to be more expensive than earlier thought. The cost forecasts of the feds used to be pretty accurate. In the six years before COVID these revisions averaged $0.7 billion. Then COVID threw a spanner in the works. Every time the government updated the budget, it added an average of $3.0 billion to expected costs. Still, the ravages of COVID are long since in the rearview mirror, so you’d hope those forecasting errors shrunk again. But, as the chart shows, they didn’t. There have been seven budget updates since late 2022, and they’ve revealed errors that average $18.4 billion. And now the latest cost revision has weighed in at $47.8 billion more than had been expected at the 2025-26 budget. The bottom line? It is long past time for an overhaul of our budget rules, reporting and forecasting. They are all being badly abused: we’re being taken for mugs. And unless and until we hold our politicians to a higher standard, then maybe we deserve to be …

THE PUBLIC SERVICE JOB OUTLOOK – BY THE NUMBERS For those playing along at home, the budget forecasts imply a loss of about 7,000 jobs a year (or 28,000 by the fourth year) How so? The government forecasts its wage bill to stay steady. But wage growth is around 3½% a year So, if the wage bill isn’t changing but wages are, then the number of jobs has to go down at the same pace that wages go up – that is, by around 3½% a year Given direct Australian public service numbers of around 200,000 people, that says job losses of about 3½% of that – or 7,000 a year To be clear, these are exactly the types of things that a second term government with a huge majority and a collapsing opposition should do If you’re gonna be a long term government, then you have to take tough decisions as well as popular ones